Appropriations

House Amendment #1 to HB 117 appropriates $1,622,785,000 for the FY 2018 state contribution to SURS. Of this amount, $1,407,785,000 comes from the General Revenue Fund and $215,000,000 comes from the State Pensions Fund. The certified state contribution to SURS for FY 2018 is $1,753,685,000.

HA #1 also appropriates $4,133,336 for the FY 2018 state contribution to the College Insurance Program (“CIP”), which provides health insurance to community college retirees. This amount is equal to the certified contribution for FY 2018.

HB 3868 authorizes the governor to designate a contingency reserve to balance the budget. The contingency reserve may be comprised of amounts appropriated from funds held by the state treasurer to any agency for fiscal year 2017 and fiscal year 2018, including amounts appropriated under a statutory continuing appropriation. However, the governor cannot designate amounts to be set aside as a contingency reserve from amounts appropriated for: (1) payment of debt service; (2) general state aid for schools; or (3) grants for early childhood education.

Additionally, HB 3868 authorizes the governor to delay payments under any statutory continuing appropriation, except for payments of debt service, for fiscal year 2017 and fiscal year 2018. Any payment so delayed may be paid out of the next fiscal year’s appropriation.

HB 3868 is identical to Senate Bill 2063 of the 100th General Assembly.

HB 3926 appropriates $1,461,685,000 for the annual required state contribution to SURS for fiscal year 2018. Of this amount, $1,321,685,000 is appropriated from the General Revenue Fund, and $140,000,000 is appropriated from the state Pensions Fund. The certified fiscal year 2018 state contribution to SURS is $1,753,685,000.

HB 3926 also appropriates $0 from the Education Assistance Fund for the state contribution to the College Insurance Program (“CIP”) for fiscal year 2018. The certified fiscal year 2018 state contribution to CIP is $4,133,336.

HB 3926 is identical to Senate Bill 2164 of the 100th General Assembly, as introduced.

HB 3926 takes effect July 1, 2017, if Senate Bill 2063 of the 100th General Assembly (the Unbalanced Budget Response Act), as introduced in the Illinois Senate, becomes law.

***As it passed the Senate, SB 4 amends the General Obligation Bond Act to authorize the State to issue $7 billion worth of State General Obligation Restructuring Bonds for the purpose of paying vouchers (bills) incurred by the State prior to July 1, 2017. As it passed the Senate, SB 4 does NOT include any language authorizing the issuance of State Pension Obligation Acceleration Bonds.***

Senate Amendment #1 to SB 4 adds language amending the Illinois State Finance Authority Act. It authorizes the Illinois Finance Authority to issue up to $250 million in State Pension Obligation Acceleration Bonds if the amount appropriated for accelerated pension benefit payments is less than the amount required for those payments. It further creates a continuing appropriation for the payment of principal and interest due on State Pension Obligation Acceleration Bonds. Senate Amendment #2 to SB 4 is identical to Senate Amendment #1 to SB 4. Senate Amendment #3 to SB 4 makes a technical change. Senate Amendment #4 removes Senate Bill 11 of the 100th General Assembly and adds Senate Bill 16 of the 100th General Assembly to the list of bills that must become law in order for the legislation to take effect. Senate Amendment #5 to SB 4 adds an immediate effective date that is not contingent upon the enactment of any other legislation.

As introduced, SB 4 amends the General Obligation Bond Act to authorize the State to issue $7 billion worth of State General Obligation Restructuring Bonds for the purpose of paying vouchers (bills) incurred by the State prior to July 1, 2017.

As introduced, SB 4 takes effect immediately upon becoming law, but does not take effect at all unless Senate Bills 1-3 and 5-13 of the 100th General Assembly also become law.

SB 6 appropriates $1,587,985,000 for the FY 2018 state contribution to SURS. Of this amount, $1,372,985,000 comes from the General Revenue Fund and $215,000,000 comes from the State Pensions Fund. The certified state contribution to SURS for FY 2018 is $1,753,685,000. (Please note: SB 42 requires recertification of the FY 2018 state contribution by November 1, 2017.)

SB 6 also appropriates $4,133,336 for the FY 2018 state contribution to the College Insurance Program (CIP), which provides health insurance to community college retirees. This amount is equal to the certified contribution for FY 2018.

SB 42 creates the FY 2018 Budget Implementation Act for the purpose of making changes in state programs that are necessary to implement the state budget.

SB 42 authorizes the use of money in the State Pensions Fund as part of the FY 2018 state contribution to SURS. It also makes the following changes to SURS:

Optional Hybrid Plan

SB 42 creates an optional hybrid plan for new participants of SURS on or after the implementation date of the optional hybrid plan and current Tier II participants who irrevocably elect to participate in the optional hybrid plan. The optional hybrid plan does not apply to participants in the Self-Managed Plan. Individuals who first become participants of SURS on or after the implementation date of the optional hybrid plan (and who are not participants in the Self-Managed Plan) can irrevocably elect to participate in Tier II within 30 days after becoming a participant. The implementation date of the optional hybrid plan means the earliest date upon which the SURS Board of Trustees authorizes members of SURS to begin participating in the optional hybrid plan. SURS must endeavor to make such participation available as soon as possible after the effective date of the legislation and must establish an implementation date by board resolution.

Stated differently, individuals who first become participants of SURS on or after the implementation date of the optional hybrid plan will have the option to participate in: the optional hybrid plan, the Tier II plan or the Self-Managed Plan. Current Tier II participants will have the option to elect to participate in the optional hybrid plan.

For the defined benefit portion of the optional hybrid plan:

Final average salary (“FAS”) equals the average monthly (or annual) salary during the period of service in which earnings were the highest during the last 120 months (or 10 years) of service.

Pensionable earnings are capped at the federal Social Security Wage Base.

Age and service credits for retirement are the normal Social Security retirement age applicable to that member, but no earlier than age 67, with 10 years of service credit.

Retirement annuities are calculated using the following formula: 1.25 percent x each year of service credit x FAS.

Automatic annual increases are applied beginning one year after retirement, calculated at ½ of the percentage increase in the CPI-W.

Survivor benefits are equal to 66 2/3 percent of the member’s retirement annuity on the date of death, or 66 2/3 percent of the member’s earned annuity without an age reduction if the member was not retired on the date of death.

Employee contributions are equal to the lower of 6.2 percent of salary or the normal cost of benefits under the defined benefit portion of the plan.

For the defined contribution portion of the optional hybrid plan:

Employee contributions are equal to a minimum of 4 percent of salary.

Employer contributions for employees with at least one year of service with the same employer are equal to a rate that may be set for individual employees, but no higher than 6 percent of salary and no lower than 2 percent of salary.

The participant vests in employer contributions when they are paid into his or her account.

The plan must provide a variety of investment options (including investments handled by the Illinois State Board of Investment) and a variety of options for payouts to retirees and their survivors.

State Funding Changes

SB 42 requires the state to make additional contributions to SURS in FY 2018, FY 2019 and FY 2020 equal to 2 percent of the total payroll of each employee who participates in the optional hybrid plan or who participates in the Tier II plan in lieu of the optional hybrid plan.

SB 42 requires any change in an actuarial assumption that increases or decreases the required state contribution and first applies in FY 2018 or thereafter to be implemented in equal annual amounts over a five-year period beginning in the state fiscal year in which the change first applies to the required state contribution.

SB 42 requires any change in an actuarial assumption that increases or decreases the required state contribution and first applied to the state contribution in FY 2014, FY 2015, FY 2016 or FY 2017 to be implemented as already applies in state fiscal years before 2018 and, in the portion of the five-year period beginning in the state fiscal year in which the actuarial change first applied that occurs in state fiscal year 2018 or thereafter, by calculating the change in equal annual amounts over that five-year period and then implementing it at the resulting annual rate in each of the remaining fiscal years in that five-year period.

SB 42 requires recertification of the amount of the required state contribution for FY 2018, based on the changes made by the legislation.

Employer Funding Changes

SB 42 requires each employer under SURS to contribute the following amounts:

In FY 2018, FY 2019 and FY 2020, the normal cost of the defined benefit plan, minus the employee contribution, for each employee of the employer who participates in the optional hybrid plan or participates in the Tier II plan in lieu of the optional hybrid plan; or

Beginning in FY 2021, the normal cost of the defined benefit plan, minus the employee contribution, plus 2 percent, for each employee of the employer who participates in the optional hybrid plan or participates in the Tier II plan in lieu of the optional hybrid plan; plus;

Beginning in FY 2018, the amount for that fiscal year to amortize any unfunded actuarial accrued liability attributable to the defined benefits of the employer’s employees who first became participants on or after the implementation date of the optional hybrid plan and the employer’s employees who were previously Tier II participants but elected to participate in the optional hybrid plan, determined as a level percentage of payroll over a 30-year rolling amortization period.

Stated differently, beginning in FY 2018, the employer will be responsible for: (1) the employer normal cost of the defined benefits of optional hybrid plan participants and the employer normal cost of the defined benefits of participants who would have been in the optional hybrid plan but elected to participate in the Tier II plan; and (2) the unfunded liability of the defined benefits of optional hybrid plan participants, participants who would have been in the optional hybrid plan but elected to participate in the Tier II plan, and participants who currently participate in the Tier II plan but elect to participate in the optional hybrid plan. Additionally, beginning in FY 2021, the employer will pay a 2 percent surcharge for optional hybrid plan participants and participants who would have been in the optional hybrid plan but elected to participate in the Tier II plan.

SB 42 also requires the employer to pay the employer normal cost of the portion of an employee’s earnings that exceeds the amount of salary set for the governor, for academic years beginning on or after July 1, 2017.

SB 2063 authorizes the governor to designate a contingency reserve to balance the budget. The contingency reserve may be comprised of amounts appropriated from funds held by the state treasurer to any agency for fiscal year 2017 and fiscal year 2018, including amounts appropriated under a statutory continuing appropriation. However, the governor cannot designate amounts to be set aside as a contingency reserve from amounts appropriated for: (1) payment of debt service; (2) general state aid for schools; or (3) grants for early childhood education.

Additionally, SB 2063 authorizes the governor to delay payments under any statutory continuing appropriation, except for payments of debt service, for fiscal year 2017 and fiscal year 2018. Any payment so delayed may be paid out of the next fiscal year’s appropriation.

SB 2063 is identical to House Bill 3868 of the 100th General Assembly.

SB 2164 appropriates $1,461,685,000 for the annual required state contribution to SURS for fiscal year 2018. Of this amount, $1,321,685,000 is appropriated from the General Revenue Fund, and $140,000,000 is appropriated from the state Pensions Fund. The certified fiscal year 2018 state contribution to SURS is $1,753,685,000.

SB 2164 also appropriates $0 from the Education Assistance Fund for the state contribution to the College Insurance Program (“CIP”) for fiscal year 2018. The certified fiscal year 2018 state contribution to CIP is $4,133,336.

SB 2164 is identical to House Bill 3926 of the 100th General Assembly, as introduced.

SB 2164 takes effect July 1, 2017, if Senate Bill 2063 of the 100th General Assembly (the Unbalanced Budget Response Act), as introduced in the Illinois Senate, becomes law.

As it relates to SURS, SB 2181 amends the State Finance Act and the Uniform Disposition of Unclaimed Property Act to authorize the use of money in the State Pensions Fund as part of the annual required state contribution to SURS for Fiscal Year 2018.

SB 2181 also amends the State Employees Group Insurance Act of 1971 and the State Pension Funds Continuing Appropriation Act to end the continuing appropriation of the annual certified State contribution for the College Insurance Program.

Finally, SB 2181 caps state general funds spending for fiscal year 2018 through fiscal year 2022 at $36 billion annually, except for: increases over amounts appropriated in fiscal year 2018 due to the certified state contributions to the five state-funded retirement systems; increases over amounts transferred in fiscal year 2018 pursuant to the General Obligation Bond Act; and increases over payments made in fiscal year 2018 necessary to cover state obligations of the State Employees Group Insurance Act of 1971. If the auditor general reports that state spending has exceeded the cap for the fiscal year, and if the General Assembly does not pass legislation to reduce state spending to a level at or below the cap, then, for the purposes of reducing state spending to a level at or below the cap, the governor may designate amounts to be set aside as a reserve from the amounts appropriated from the state general funds for all boards, commissions, agencies, institutions, authorities, colleges, universities, and bodies politic and corporate of the state. The amounts placed in reserves cannot be transferred, obligated, encumbered, expended or otherwise committed unless so authorized by law. Any public act authorizing the use of amounts placed in reserve by the governor is considered state spending, unless the public act authorizes the use of amounts placed in reserves in response to a fiscal emergency declared by the governor.

SB 2182 appropriates $1,481,426,000 from the General Revenue Fund to SURS as part of the annual required state contribution for fiscal year 2017. SB 2182 also appropriates $4,309,111 from the General Revenue Fund for the College Insurance Program for fiscal year 2017. These appropriations take effect immediately upon becoming law.

Public Acts 99-0523 and 99-0524 (The Fiscal Year 2016 and Fiscal Year 2017 Stopgap Budget) appropriated $190 million from the State Pensions Fund as part of the annual required state contribution to SURS for fiscal year 2017. When added to the amounts contained in SB 2182, the total appropriation for the annual required state contribution to SURS for fiscal year 2017 equals $1,671,426,000, which is the amount of the total certified state contribution for fiscal year 2017. $4,309,111 is the amount of the certified state contribution to the College Insurance Program for fiscal year 2017.

SB 2182 appropriates $1,461,685,000 to SURS as part of the annual required State contribution for Fiscal Year 2018. Of this amount, $1,306,685,000 is appropriated from the General Revenue Fund, and $155,000,000 is appropriated from the State Pensions Fund. SB 2182 also appropriates $3,307,000 from the General Revenue Fund for the College Insurance Program for Fiscal Year 2018. These appropriations take effect on July 1, 2017.

The certified State contribution to SURS for fiscal year 2018 is $1,753,685,000. The certified state contribution to the College Insurance Program for fiscal year 2018 is $4,133,336.

SB 2182 does not take effect unless Senate Bill 2178 of the 100th General Assembly (The Budget Management and Control Act), as introduced in the Illinois Senate, becomes law.

SB 2198 authorizes the re-issuance of $2.2 billion worth of General Obligation Bonds to retire outstanding bonds issued to finance the Fiscal Year 2011 State contribution to the State-funded retirement systems.

SB 2198 takes effect in accordance with the Effective Date of Laws Act.

SB 2205 amends the Illinois Finance Authority Act and the General Obligation Bond Act to authorize the Illinois Finance Authority to issue up to $250 million in State Pension Obligation Acceleration Bonds if the amount appropriated for accelerated pension benefit payments is less than the amount required for those payments. SB 2205 creates a continuing appropriation for the payment of principal and interest due on State Pension Obligation Acceleration Bonds.

SB 2205 also authorizes the State to issue up to $7 billion worth of State General Obligation Restructuring Bonds for the purpose of paying vouchers (bills) incurred by the State prior to July 1, 2017.

Finally, SB 2205 amends the State Finance Act to cap State general funds spending for Fiscal Year 2018 through Fiscal Year 2025 at $31.374 billion annually. If the Auditor General reports that State spending has exceeded the cap for the fiscal year, and if the General Assembly does not pass legislation to reduce State spending to a level at or below the cap, then, for the purposes of reducing State spending to a level at or below the cap, the Governor may designate amounts to be set aside as a reserve from the amounts appropriated from the State general funds for all boards, commissions, agencies, institutions, authorities, colleges, universities, and bodies politic and corporate of the State. The amounts placed in reserves cannot be transferred, obligated, encumbered, expended, or otherwise committed unless so authorized by law. Any Public Act authorizing the use of amounts placed in reserve by the Governor is considered State spending, unless the Public Act authorizes the use of amounts placed in reserves in response to a fiscal emergency declared by the Governor.

SB 2214 appropriates $1,481,426,000 from the General Revenue Fund (“GRF”) as part of the FY 2017 state contribution to SURS. Previously, Public Act 99-0524 appropriated $190,000,000 from the State Pensions Fund to SURS as part of the FY 2017 state contribution. When added together, these amounts equal the certified FY 2017 state contribution to SURS ($1,671,426,000). SURS has been receiving payments for the GRF portion of the FY 2017 state contribution under the State Pension Funds Continuing Appropriation Act.

SB 2214 also appropriates $4,309,111 from the General Revenue Fund for the FY 2017 state contribution to the College Insurance Program (CIP), which provides health insurance to community college retirees. This amount equals the certified FY 2017 state contribution to CIP. Payment of the FY 2017 state contribution to CIP has been initiated under the State Pension Funds Continuing Appropriation Act.

Fiscal Year 2018:

SB 2214 appropriates $1,461,685,000 for the FY 2018 state contribution to SURS. Of this amount, $1,306,685,000 comes from the General Revenue Fund and $155,000,000 comes from the State Pensions Fund. The certified FY 2018 state contribution to SURS is $1,753,685,000.

SB 2214 also appropriates $2,755,000 from the General Revenue Fund for the FY 2018 state contribution to the College Insurance Program (CIP), which provides health insurance to community college retirees. The certified FY 2018 state contribution to CIP is $4,133,336.

Effective Date:

The provisions under SB 2214 related to FY 2017 take effect immediately upon becoming law, and the provisions under SB 2214 related to FY 2018 take effect on July 1, 2017.

SB 2217 creates the FY2017 and FY2018 Budget Implementation Act. It makes the following changes related to SURS:

Fiscal Year 2018 State Contribution:

SB 2217 amends the funding formula under the SURS article of the Illinois Pension Code to establish the annual required state contribution to SURS as $1,461,685,000 for FY 2018. The FY 2018 certified state contribution to SURS is $1,753,685,000.

SB 2217 amends the State Finance Act and the Uniform Disposition of Unclaimed Property Act to authorize the use of money in the State Pensions Fund as part of the annual required state contribution to SURS for FY 2018.

College Insurance Program Funding:

SB 2217 amends the State Employees Group Insurance Act of 1971 and the State Pension Funds Continuing Appropriation Act to end the continuing appropriation of the annual certified state contribution for the College Insurance Program (“CIP”), which provides health insurance to community college retirees, upon the conclusion of FY 2017.

State Finance Act:

SB 2217 amends the State Finance Act to authorize the governor to designate a contingency reserve from amounts appropriated from funds held by the state Treasurer for fiscal years 2018 through 2021 to any agency, including amounts appropriated pursuant to a statutory continuing appropriation. However, the governor cannot designate a contingency reserve from amounts that have been appropriated: (1) for payment of debt service; (2) to the State Board of Education for evidence-based funding to the common schools; (3) to the State Board of Education for grants or aid for early childhood education; (4) for contributions to the state-funded retirement systems; or (5) to the Attorney General, Secretary of State, Treasurer, Comptroller or any legislative or judicial branch agency or office.

Illinois Income Tax Act:

SB 2217 amends the Illinois Income Tax Act to establish the state spending limitation for fiscal years 2018 through 2022 as $36 billion annually, except for: (1) increases over amounts as required to be paid to the state-funded retirement systems; (2) increases in amounts required to be transferred for the payment of principal and interest on bonds under the General Obligation Bond Act; or (3) increases in payments to cover state obligations of the State Employees Group Insurance Act of 1971. If the Auditor General reports that state spending has exceeded the limitation for the fiscal year, and if the General Assembly does not pass legislation to reduce state spending to a level at or below the limitation, the governor may designate amounts to be set aside as a reserve from the amounts appropriated from the state general funds for all boards, commissions, agencies, institutions, authorities, colleges, universities, and bodies politic and corporate of the state, but not other constitutional officers, the legislative or judicial branch, the Office of the Executive Inspector General or the Executive Ethics Commission. The amounts placed in reserves cannot be transferred, obligated, encumbered, expended or otherwise committed unless so authorized by law. Any public act authorizing the use of amounts placed in reserve by the governor is considered state spending, unless the public act authorizes the use of amounts placed in reserves in response to a fiscal emergency declared by the governor.